BC Expert: Aereo TV

Lyons is an assistant professor at Boston College Law School who specializes in the areas of telecommunications and Internet regulation, administrative law, and property. He is a frequent contributor to several blogs focusing on the intersection of law and technology, including TechPolicyDaily.com. Before joining the faculty, he practiced energy, telecommunications, and administrative law in Los Angeles. Professor Lyons has participated in proceedings before both the Federal Communications Commission and various state public utilities commissions.

*********************************APRIL 22, 2014

It’s been referred to as TV’s next frontier and this morning, the US Supreme Court is hearing arguments on whether Aereo TV can continue delivering its broadcast programming over the internet to a multitude of electronic devices at a fraction of the cost to consumers.

“I think they have a very revolutionary business model,” says Boston College Law School Assistant Professor Daniel Lyons, an expert on the Federal Communications Commission. “It’s a good example of how technology can upset the apple cart of law in ways that are good for consumers but I’m not sure they’re going to win this one.”

That’s because the television networks are waging a fierce fight to protect the billions of dollars in retransmission fees that are part of cable television. While some network programming can be seen later via the internet, currently there is no way to watch network television broadcasts live on the internet; Aereo, with dime-sized antennas, is the first company that allows viewers to not only watch network television live, but also record it for later viewing. The networks pay billions of dollars for its programming but Aereo pays nothing for its broadcast content, then offers it cheaply to its subscribers. The networks are claiming that by taking the broadcast signal and retransmitting it to their subscribers, Aereo has engaged in a “public performance” of the copyrighted network broadcast, this violating the Copyright Act. But Aereo is arguing that because no two consumers share the same antenna or digital recording, its set-up isn't a public transmission.

“Before cable, people got their broadcast signal through rabbit ear antennas on top of a TV or from a giant antenna on the roof of your house and what that would do is pull in the local signal from the antennae down to your TV and that was considered a private performance - you don’t need permission to do that,” says Professor Lyons, who has participated in rulemaking proceedings before the FCC. “Aereo’s argument is they’re doing the same thing except that rather than putting an antenna on top of your house and running a wire to your TV, they’re using an antennae elsewhere in the city and running a really long wire over the internet to your television. Aereo maintains banks of little dime shaped TV antennas and when you sign up as a subscriber you’re essentially leasing one of these antennas to be your personal antenna in order to send local signals to you. That’s the crux of the argument – whether Aereo is renting equipment each month or whether is selling you the content of a copyrighted broadcast.”

Lyons say the online video upstart, now operating in eleven cities, is taking advantage of a loophole in a 2008 Second Circuit ruling that allowed Cablevision to operate its DVR service in the cloud.

“Aereo said, ‘If that’s the case, then how about an antenna at your house or antennae at our offices running through the internet? Seems like it should be OK,’” says Lyons. “Aereo’s entire business model is built on the law. It’s a model that economically makes very little sense. If you were an engineer and said ‘Let’s design a system,’ you’d build one antenna, draw in the signal and run lots of wires from that antenna to individual subscribers. That’s the efficient economic way of doing it but that’s clearly barred by the Copyright Act because one-to-many transmission is considered a public broadcast.

“The retransmission consent issue is the business reason as to why this case is being brought. The local broadcaster don’t care very much about whether copyright is public or private because technically broadcasters are supposed to offer their signal over the air for free to consumers who have antennas. What they care about is if too many people join Aereo, then consumers will be getting more signals for free, they won’t be paying the cable companies, and the cable companies will have to reduce the amount of retransmission fees and consent revenues that they’re paying back to the broadcasters.”